4
Strategies for Addressing Physician Supply Issues

In the previous chapters, the committee presents data substantiating the view that the United States has, or at least soon will have, a surplus of physicians. The evidence is especially strong concerning personnel in most subspecialty areas; it is mixed with respect to clinicians in primary care. The committee examined the likely effects of such high numbers in five areas: health care costs and expenditures, access to care, quality of care, appropriate use of human resources, and the future of academic health centers.

The committee drew no firm conclusions about the net effects of these levels of physician supply, for two reasons. First, the interactions of the underlying forces that shape the U.S. health care system are complex and evolving; in particular, the influence that the managed care revolution will exert is uncertain. Second, good data on patterns of production and employment of the entire health care workforce, as they relate to these systemwide changes, are sparse.

Nevertheless, the committee believes that, on balance, the large and rising numbers of physicians in this nation can have some negative consequences—that is, predicaments that will be far more difficult to address and resolve in the future than they are today. For that reason, the committee advocates action on several fronts to moderate current growth in the U.S. physician supply and forestall the potentially deleterious effects of unfettered increases.

This chapter lays out the committee's view of strategies that might be considered for coping with the abundance of physicians today and the more worrisome saturation point projected for the future. Although the committee does not examine each option in detail, it does underscore two points: (1) some concrete steps need to be taken, and (2) they need to be taken soon.



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The Nation's Physician Workforce: Options for Balancing Supply and Requirements 4 Strategies for Addressing Physician Supply Issues In the previous chapters, the committee presents data substantiating the view that the United States has, or at least soon will have, a surplus of physicians. The evidence is especially strong concerning personnel in most subspecialty areas; it is mixed with respect to clinicians in primary care. The committee examined the likely effects of such high numbers in five areas: health care costs and expenditures, access to care, quality of care, appropriate use of human resources, and the future of academic health centers. The committee drew no firm conclusions about the net effects of these levels of physician supply, for two reasons. First, the interactions of the underlying forces that shape the U.S. health care system are complex and evolving; in particular, the influence that the managed care revolution will exert is uncertain. Second, good data on patterns of production and employment of the entire health care workforce, as they relate to these systemwide changes, are sparse. Nevertheless, the committee believes that, on balance, the large and rising numbers of physicians in this nation can have some negative consequences—that is, predicaments that will be far more difficult to address and resolve in the future than they are today. For that reason, the committee advocates action on several fronts to moderate current growth in the U.S. physician supply and forestall the potentially deleterious effects of unfettered increases. This chapter lays out the committee's view of strategies that might be considered for coping with the abundance of physicians today and the more worrisome saturation point projected for the future. Although the committee does not examine each option in detail, it does underscore two points: (1) some concrete steps need to be taken, and (2) they need to be taken soon.

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements Strategic choices are discussed in three main categories. One set of options reflects an extreme laissez-faire approach; it would essentially leave the problem for the health care market to sort out and eschew all but the most innocuous data collection or regulatory steps. Another takes a severe regulatory approach; it would involve the public sector or the professions, or both, in stringent steps to monitor and control the production of physicians in this country. The third set of options might be characterized generically as those belonging to a regulated or planned market; it would permit the market to work where this is perceived to be both desirable and effective and would invoke government intervention where that seemed necessary or more constructive. As shown later, the committee en toto did not embrace the two extreme positions (all market, all regulatory), although some committee members voiced strong arguments in favor of a free market approach and others distinctly favored regulatory tactics. Rather, for pragmatic and philosophical reasons, the committee here examines several ''constrained market" steps and highlights those it believes most appealing and workable in today's environment. From this analysis, the committee reaches the five policy recommendations discussed in the remainder of the chapter. DO NOTHING: THE FREE OR UNREGULATED MARKET APPROACH In this strategy, little or no intervention on the part of government would be undertaken. Instead, the nation would rely on various market signals, such as underemployment of physicians, falling incomes, and similar indications to effect the appropriate corrections and to do so in a reasonably timely way. For example, such signs might discourage people from entering the medical profession at all, or they might influence specialty choice or practice location decisions. A strong belief in the adequacy of markets in the health care arena might even dictate that the physician oversupply issue be set aside, on the grounds that imperfections in the market at the moment will, over time, correct themselves without external intervention. Backers of this view might also argue that an "oversupply" of physicians is to be welcomed because it will help a competitive, managed health care environment to function better and to hold down health care spending. It was the opinion of at least one member of the committee that a physician surplus is a precondition for the penetration of managed care into the medical marketplace and that, over the long run, managed care will have a salutary effect on the quality and costs of, and access to, medical services. In the absence of evidence to demonstrate that the current or projected surplus has had or will have significant adverse effects on any of these, the appropriate strategy,

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements according to this view, is not to intervene in the production or importation of qualified physicians. For various reasons, the committee as a whole rejected any "pure" version of this approach. Specifically, members did not subscribe to the notion that a true market exists in health care generally. Therefore, it saw no persuasive reason to believe that such a market would exist for personnel in this sector, at least not in the immediate future.1 For example, it is not a "free" market because the production of physicians is subsidized so heavily by both states and the federal government. Furthermore, three imperfect markets may actually be operating: one is international and involves a global oversupply of physicians; one is national in scope and based on overall requirements for physician services; and the third is local and based more on hospitals' needs for inexpensive labor. One specific concern that the committee had about reliance solely on market forces is that this approach might thwart effective controls on the influx of graduates of foreign medical schools (i.e., international medical graduates, or IMGs)—a phenomenon that is of significant concern (see Chapter 3). This undesirable outcome is related to the fact that the market provides incentives to keep the production of physicians high at the residency or graduate medical education (GME) level through the existing Medicare reimbursement scheme for GME; residents, including IMGs, are essentially income generators for hospitals (Shine, 1995). INSTITUTE CENTRAL FEDERAL REGULATION General Approaches to Planning and Managing Physician Supply The United States has a long history of proposals based on central planning of the health workforce, and several have been put forth in recent years. Among them are recommendations from the Physician Payment Review Commission (PPRC) and the Council on Graduate Medical Education (COGME). Ideas set out by the Clinton administration in the Health Security Act (1994), which was a highly centralized approach to health care reform, stemmed from proposals such as those in the PPRC reports of 1993 and 1994 (Reinhardt, 1994). For instance, the act called for the creation of a National Workforce Commission and a cap on first-year residencies tied to findings from that commission (and presumably to the production of U.S. medical schools); it did not, however, include any steps to curtail undergraduate education. It also did not recommend any steps to reform the federal (Medicare) payments of direct or indirect medical education (DME, IME) costs for hospitals, leaving in place the link between

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements graduate training and service. Some other reform proposals in the early 1990s had a variety of similar elements intended to facilitate central management of the supply of physicians in this country. The fourth COGME report (1994), developed in the midst of the health care reform debate, strongly argued the case about a significant mismatch between physician supply and requirements (see Chapter 2), called for specific physician workforce goals by the year 2000, and laid out several legislative recommendations designed to achieve those goals. Among the specific advice were the following: legislate specific numerical goals for the physician workforce; fund GME by all payers (i.e., not just Medicare); establish a National Physician Workforce Commission; limit total funded residency slots to the number of 1993 U.S. medical school graduates plus 10 percent, and allocate this lower number of GME positions to "medical school coordinated consortia"; provide transition payments to hospitals most affected by the loss of resident physicians (e.g., the small number of IMG-dependent hospitals that deliver a disproportionate amount of care to the poor); and give incentives to individuals and institutions to (a) graduate more minority physicians and more generalists, (b) improve geographic distribution, and (c) build primary care teaching capacity. More recently, the seventh COGME report (1995) expanded on or reiterated some of the earlier ideas, particularly those relating to transition funding and incentives with respect to minority physicians, generalists, better geographic distribution, and primary care. Among the steps advocated in the seventh report were the following: create demonstration projects to foster the growth of consortia to manage medical education policy and financing; pay Medicare DME and IME for residents who are graduates of U.S. medical schools (USMGs), but decrease such payments for IMG residents to 25 percent of 1995 levels; use DME and IME payments to promote generalist training and more teaching outside hospital settings; thus, funding would follow the resident and not remain with the hospital; reweight DME and IME payments in various ways to promote the other goals (such as generalist training); separate the Average Adjusted Per Capita Cost (AAPCC) from Medicare capitation rates for the at-risk health maintenance organization contractors and use those funds to support hospital GME; and reauthorize the National Health Service Corps and include it in a consolidated group of Title VII Program (Public Health Service Health Professions Education statutes). Wennberg et al. (1993) laid out numerous other ideas for federal interventions that fall short of the broad scope envisaged by some reform

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements proposals, although they were within what the authors termed a "public-sector physician work-force plan" (p. 102). For example, they argued that the role of the National Health Service Corps ought to be reshaped and expanded, as a means of meeting the needs of underserved rural and urban areas. They also proposed that a workforce plan include mechanisms by which U.S. physicians might serve in medically underdeveloped countries around the world, seeing this as a "natural humanitarian outlet for our excess capacity" (p. 100). Programs such as these are probably best viewed as being largely a federal responsibility, although they are not precisely regulatory in intent or operation. They may well warrant further consideration quite independent of their likely effect (which might be small) on the basic issues of physician oversupply. Other examples of the regulatory or central planning steps that might be considered can be drawn from Canadian experience (Barer et al., 1989). Across the country, the provinces control both undergraduate medical education slots and specialty and generalist graduate training slots. All stringently restrict the entry of foreign-trained medical graduates.2 In effect, Canada has determined that its first responsibility "is to the sons and daughters of people who pay the medical education bill" (Harvey Barkun, Executive Director, Association of Canadian Medical Colleges, personal communication, September 1995). In addition, some provinces control specialist residency slots or limit the number of physicians eligible to be paid "full tariff" through the public health insurance plan, meaning that physicians cannot settle or practice any place they choose and still be reimbursed fully through usual government insurance procedures. Committee Views In general, the committee elected not to endorse these kinds of intensive, comprehensive regulatory steps on the part of the public sector to control the U.S. physician supply. The reasons are pragmatic; in today's environment the committee simply regarded them as infeasible. Furthermore, in the short run, it may not be clear what the federal government could do to have any positive impact on physician supply. The U.S. public has rejected broad involvement on the part of the central government in the intricate workings of the nation's health care system. Under those circumstances, the committee saw little reason to believe that intense involvement of federal agencies in just one aspect of that system—namely, workforce issues, particularly those related to physicians—would be any more acceptable. Moreover, in a time of federal restructuring and downsizing, the committee saw little room for creation of a new bureaucratic arrangement to carry out the myriad tasks that would be required for effective planning and oversight. The transaction costs of such planning—in terms of the political and

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements economic trade-offs that might have to be made across categories of health personnel, physician specialties, geographic areas, and other components of the health care system—could be prohibitively high. Again to quote Reinhardt (1994), "an explicit, highly visible, political algorithm that artificially limits access to a coveted lifestyle is apt to trigger fierce rivalry for the prize among different, politically organized groups …" (p. 252, emphasis in the original). Two other arguments against major federal intervention are more abstract. For one, no persuasive case has been made for significant public intervention or quotas to correct perceived or real problems in the production and use of the members of one profession—medicine—while leaving untouched and unregulated other, presumably equally distinguished, professions facing perhaps equally troubling issues. For another (Reinhardt, 1994), the U.S. public might forgive the market for failure to deal with physician workforce issues, but it will not forgive the public sector. Undertaking significant steps in this area, fraught as they are with political costs and unavoidable miscalculation, risks further harm to the federal government's image, and this is not in the nation's best interests. A CONSTRAINED MARKET APPROACH Taken individually, many recommendations from expert bodies studying the U.S. physician workforce in recent years can be considered as elements of a planned or regulated market approach. This section reiterates some of these ideas, where they can be considered singly, and raises additional suggestions. The potential steps include admitting fewer medical students (i.e., taking action at the undergraduate education level), restricting GME in various ways, curtailing immigration of foreign-trained physicians, and undertaking other social and health policy steps that provide incentives for a better-functioning marketplace. Antitrust Considerations Many of the ideas advanced below, if pursued solely by the health care community, risk violating the Sherman Antitrust Act, which prohibits actions by private parties that might restrain trade. In this context, private parties might include residency review committees (RRCs), specialty boards, and similar entities. Lerner (1995) reviewed the considerable obstacles that antitrust laws pose to many suggested solutions to physician workforce and supply issues. Problems arise, for example, in the following ways: (1) if members of a profession restrict entry into their field (beyond the steps professions now take, in any case), such as capping numbers of approved residencies in a particular speciality; (2) if

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements competitors collude or agree to restrict output or production. Generally, actions on the part of the federal or state governments—for instance, to change Medicare or Medicaid reimbursement (including payments for residency training)—are not subject to antitrust scrutiny. Similarly, actions on the part of private entities, such as consortia of academic health centers, that are called for by federal legislation also do not violate antitrust laws, but unilateral action in the absence of federal statutes would not be so protected. In short, as Page (1995) reported, private entities, such as specialty societies or RRCs, that want clear protection from antitrust violations may have to accept more regulation (e.g., federal or state law) than they might otherwise deem desirable. Exploring possible changes in antitrust laws was well beyond the committee's purview,3 but the committee would urge appropriate entities to examine the matter fully, because some modifications might enable certain groups, such as the Accreditation Council on Graduate Medical Education, to take actions to reduce residency programs on the basis of the quality of those programs. Production of Physicians from U.S. Medical Schools The number of medical students in U.S. schools is central to long-term strategies for dealing with the supply of physicians in this country. Two questions can be posed: (1) Should the number of medical students remain essentially unchanged (or increased) but other parts of the training spectrum, such as graduate medical education, be rethought? Or, (2) should fewer students be admitted to U.S. medical schools? The committee concluded that increases in the number of medical students would be unwise public policy; the nation clearly graduates a sufficient number of physicians today. Thus, it opted for a steady-state approach to undergraduate medical education. Specifically, the committee recommends that no new schools of allopathic or osteopathic medicine be opened, that class sizes in existing schools not be increased, and that public funds not be made available to open new schools or expand class size. Maintaining, but not increasing, current numbers of medical graduates, especially if more minorities are brought into the student bodies,4 was judged to be the most appealing shortrun strategy for undergraduate medical education. Explicit steps to cut production of allopathic and osteopathic students include decreasing the number of U.S. medical schools (while holding enrollment at remaining schools constant) or reducing the class size at existing schools. Such steps might be taken voluntarily by schools or by accrediting bodies, or they might be done through regulatory means or financial incentives by states or the federal government. Although in the course of events such downsizing might

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements occur, the committee has not advised specific action in this direction, for various reasons. First, in the 1960s and 1970s, public policy and government programs led to an overexpansion of U.S. schools and class sizes, and this contributed to a significant increase in physicians who remain in practice today. However, the number of physicians graduating from U.S. schools has now stabilized at a level that seems consistent with likely requirements and the nation's ability to absorb them. Second, recent increases in the number of residents in training are due almost exclusively to increases in IMG trainees. Because 75 percent or more of IMG residents remain in the United States to practice, these increases will result in continued growth in the nation's physician supply. No persuasive rationale can be put forward for leaving the incentives and openings in place for IMGs to practice in the United States while curtailing the opportunities for the nation's own youth to enter a distinguished profession. As Schroeder (1994a) asked (p. 271): "After all, how can we ask U.S. medical schools to cut back the size of their programs if we do not restrict the flow of IMGs into the country?" Third, closing medical schools or reducing class sizes might well undermine efforts to bring more minorities into the profession. It would fly in the face of the "3,000 by 2000" efforts of the Association of American Medical Colleges and of the recommendations of the Institute of Medicine (IOM) Committee on Increasing Minority Participation in the Health Professions (IOM, 1994), some of which are being implemented by the Josiah Macy, Jr., Foundation. In the main, therefore, the committee could not accept the view that decreasing opportunities for young people of this country, while leaving open those same opportunities for those from abroad, is acceptable social or health care policy. The committee recognized that some areas of the country have a high density of allopathic or osteopathic schools and produce large numbers of graduates. It endorsed the idea that public and private policymakers and other interested parties in those areas might wish to study further the question of production of medical students, with the aim of determining whether any mergers, downsizing, or other steps to rationalize the production of such graduates might be warranted. Some on the committee also observed that market forces are already at work to reduce the number of medical schools or class enrollments. These would be purely local matters, however. The committee's basic position is that, overall, the numbers of U.S. medical schools and their graduates should be at levels no higher than those that obtain today and not be reduced solely because of aggregate supply issues. Obviously, this question warrants revisiting in the future.

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements Revamp Graduate Medical Training Reduce GME Positions Without Changing GME Funding Physician residency positions in any one year now number about 145 percent of the total number of M.D. and D.O. graduates from U.S. schools. (In 1993–1994, the total number of residents and other types of trainees or fellows exceeded 108,000; of these, about 22 percent were IMGs, up from 17 percent of 95,000 residents in 1990–1991 [COGME, 1995].) As already noted, some experts advocate severe reductions in the number of residency slots while keeping the present hospital-and Medicare-based approach to GME funding intact. Among the better-known suggestions has been that the number be reduced to a specific target—namely, 110 percent of domestic output of medical students. Some believe, however, that over time, this might push the production pendulum too far toward a possible shortage of physicians. Other, softer targets, such as 115 to 120 percent, might also be considered. One less radical step, proposed by Shine (1995), is to freeze the present physician residency training slots that are subsidized by Medicare for a five-year period. (Residency slots might be reallocated among specialties within this ceiling; additional slots would have to be financed by other means.) This type of action would permit some time for further data collection and consideration of private or public policy moves; it would also likely decrease the rate of growth (albeit perhaps not the absolute number) of IMGs coming to this country. In the end, the committee concluded that the numbers of residency slots ought to be reduced substantially and that this should be effected through changes in GME funding. Its recommended strategy is discussed below. Reduce First-Year Residency Positions and Change The Approach to GME Funding The present system of Medicare reimbursement for residencies through DME and IME payments is a major incentive for teaching institutions to keep their numbers of residency positions high and expanding.5 Thus, one part of the solution to potential oversupply problems in the future is to revamp the ways in which federal programs support graduate training, particularly first-year residency slots. In keeping with the committee's principles as stated in Chapter 1 and its concerns about the growing number and proportion of IMGs in the nation's physician supply, the committee recommends that the federal government reform policies relating to the funding of graduate medical education, with the aim of bringing support for the total number of first-year residency slots much closer to the current number of graduates of U.S. medical schools. Specifically, the committee believes that GME positions supported through the

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements Medicare program should be available essentially to physicians who have graduated from U.S. medical schools, the vast majority of whom are U.S. nativeborn individuals. Eliminating tax dollar support for training of IMGs seems reasonably consistent with the rules on training grants supported by the National Institutes of Health.6 These basic ideas are not especially new. As cited above, for example, the seventh COGME report advocated that GME payments for residents who are graduates of foreign medical schools be much lower than for those who are graduates of U.S. medical schools. In addition, in this context the Pew Health Professions Commission (1995a) advocated the following steps: tightening existing U.S. immigration laws to ensure that IMGs return home once training is completed; discontinuing the federal subsidy for training IMGs and replacing such support with funding from either the parent country or from local hospital revenues; and limiting the number of first-year graduate training positions supported by federal dollars to the number of graduates of U.S. medical schools plus 10 percent. As this IOM report was being put into final form, the Pew Health Professions Commission (1995b) issued another report concerning what it characterizes, for American medicine, as a "dislocation of crisis proportions" (p. 42). To address the oversupply problems, the commissioners called for action on three fronts (pp. 44-45): "First, the number of residency training positions must be reduced to a level of no more than the needs now known necessary in well-established, stable managed care plans.… Second, … it will be essential to give preference for these prestigious and lucrative positions to American citizens, [and] the nation's immigration laws must be tightened to ensure that those who seek training here return to their native countries for practice unless their skills are needed here.… [Third, the] Commission recommends that coincident with the reduction in residency programs, the number of first year medical school positions be reduced by 20 to 25 percent over the next ten years." In a somewhat different tactic, as this report was being prepared the proposed Medicare Preservation Act of 1995 (H.R. 2425) effectively tied reductions in GME payments to citizenship (not just school of graduation). It specifically proposed the following: "beginning in FY [fiscal year] 1996, the FTE [full-time equivalent] amount paid for medical residents who are not citizens or nationals of the United States (or citizens of Canada) would be reduced and ultimately eliminated by lowering the FTE weight that a hospital would be allowed to count for GME payments to: 0.75 in FY1996; 0.50 in FY1997; 0.25 in FY1998; and for cost reporting periods beginning during

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements FY1999 or any subsequent fiscal year, zero" (Committee on Ways and Means, 1995, p. 190). Disconnect Funding of Service Delivery From Physician Training No one has reservations about the contributions that physicians in residency training make to patient care in this nation today. Therefore, the value of appropriate levels of funding for young physicians at this stage of their training is not in doubt. Nevertheless, the committee believes that the nation's current mechanisms for underwriting these costs have some perverse effects. The link between payments for service and GME, particularly Medicare program outlays for DME and IME, creates incentives for hospitals to establish more and more residency programs and fill them with IMGs (once the output of domestic schools is used up). The committee was critical of those incentives and, therefore, of the link. Hence, because the country's present approach—open-ended GME support to hospitals for their residency positions—offers no easy means of implementing the committee's recommendation to lower the total number of residencies or of controlling the entry of IMGs into practice in this country (discussed later), the committee concluded that the connection between patient care and residency training through these mechanisms ought to be severed. One way to accomplish this is to tie GME support to medical graduates directly rather than to send it solely to hospitals; put another way, current federal support for the graduate training of physicians could be uncoupled from payments that relate more to service demands on hospitals. Changes such as these would have the twin effects of making residency training slots less attractive financially to hospitals and, thereby, curbing the numbers of such positions. This in turn would likely act as a check on the ever-rising numbers of IMGs who use the graduate training route as a means of eventually entering into practice in this country. One commonly advanced tactic involves the use of vouchers (at least for the DME portion of GME) conferred specifically on USMGs, with perhaps some additional vouchers made available to IMGs who would come to the United States solely for training and then return to their countries of origin or otherwise depart the United States. With vouchers, some or all of the salary and other expenses of residents (i.e., the traditional DME portion of GME) accompany the actual individuals; they do not go directly to hospitals or other institutions offering advanced training and are not bound to complex formulas based on the number of residents in teaching institutions.7

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements IME payments cover costs associated with the presence of GME programs, such as extra demands on hospital staff, greater severity of illness of patients, and additional tests or procedures that residents may order; they are not direct GME costs (such as resident stipends). IME reimbursements would not necessarily be affected by the committee's recommendations about decoupling education support from service payments in hospitals, except to the degree that any change in a hospital's residency teaching program would change these factors and thus lower (or raise) the related IME payment. As this report was being prepared, more direct changes in IME were being suggested through proposals to overhaul the Medicare program (Committee on Ways and Means, 1995). Given its time and resource constraints, the committee could not reach a considered opinion on the best way to effect its recommendation concerning reforms in GME funding. Rather, it believed that significant and immediate exploration of such a change (e.g., a voucher program and other options) is warranted and that longer-run determinations should be informed by expanded data collection and research (see below). It noted also that significant attention need to be given to IME issues quite independent of questions related to DME and advised that considerations be given to expanding IME funding to nonhospital teaching settings. Specific Controls on Immigration Central Government Regulation That the committee eschewed central planning of the U.S. physician supply, particularly domestic production of physicians, does not imply that it also would refrain from advising control of the inflow of IMGs. Clearly, it recognized that some brake on the ability of IMGs to enter practice in this country was a critical element in dealing with looming oversupply issues. One strategy that could be pursued only by the federal government involves major revisions of immigration policy.8 In particular, the Immigration and Naturalization Service (INS) could be called on to develop options for limiting entry of physicians, or prospective physicians, into the United States. Where the INS could not act on its own initiative, the U.S. Congress might enact legislation that sets limits on the entry of some or all types of IMGs or erects barriers to practice in this country. In addition, Congress might enact or amend statutes to give the INS broader authority to act on its own in these matters. Several direct steps, which are not mutually exclusive, might be considered. First, the visa categories used by IMGs who come for training (i.e., exchange [J] visas) might be eliminated or the numbers admitted under such visas severely cut. Second, the INS could more vigorously enforce the "return home"

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements provisions of exchange visas, which would decrease the numbers of IMGs going into practice in this country, while not reducing the numbers who receive the benefits of U.S. graduate medical training and who provide needed services while doing so. The strengths of such a strategy are that they can be accomplished centrally and directly, and the results (once such steps are taken) would be immediate. The downsides, however, are considerable. The main one is feasibility—that is, the difficulty of simply enacting such legislation at all. (The apparently positive reception to the recent Commission on Immigration Reform [CIR] statement and fact sheet may ameliorate this factor, however.) In addition, although immigration (both legal and illegal) is clearly of major concern to the U.S. public, drastic limitations send an unfortunate, potentially xenophobic message to the rest of the world. Such limits or quotas could also have sad consequences for those immigrant families that still have close family members abroad. Moreover, how the recent CIR recommendations might in practice come to affect IMGs is not clear. Finally, as discussed in Chapter 2, directing attention solely at exchange program (J visa) physicians would involve at most only about one-third of IMGs in training. Therefore, the ways in which any changes in immigration policy and law designed to affect physicians (or health professionals generally) might be tied to broader immigration reforms were very uncertain as this report was being prepared, and the committee did not pursue them further. Controlling IMG Numbers Through GME The committee had strong concerns about the mismatch of physician supply and requirements and about the negative consequences of open-ended immigration of physicians and physicians-to-be from other countries for both the United States and donor nations. Two issues were of paramount interest: the long-term career opportunities for U.S.-schooled physicians and the use of federal tax revenues to underwrite the costs of training foreign physicians here. It did not believe that changes in general immigration law would be the best (or even a reasonably feasible) route by which to address these concerns. Rather, the most practical means of creating and enforcing limits on the use of IMGs and federal funds in their training appeared to be through constraints on graduate medical training, which is the final common pathway to practice and employment for physicians. The precise steps are discussed above in the context of changes in GME funding. Training institutions in the United States (and the nation as a whole) do have an interest in continuing to provide graduate training experiences for foreign medical graduates. Such training brings individuals of many cultures and backgrounds together in ways that can have major beneficial effects on international understanding, communication, and cooperation. Unfortunately, the

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements residency training that IMGs now receive in U.S. programs is often inappropriate preparation for the problems that they will encounter when they return home; programs that combined typical clinical training with expanded attention to traditional public health interventions might serve their interests better. In any case, however, the committee felt strongly that such foreign graduates, upon completion of their training here, ought not to remain in the United States to practice, for two main reasons: (1) their skills and professional contributions are doubtless more valuable to their own countries than to this nation, and (2) their presence in the practicing community here aggravates the mismatch between domestic physician supply and requirements. Of course, confining much of GME funding to USMGs, as recommended above, does not prevent teaching institutions from using IMG residents to any extent they choose. It does mean that public (e.g., Medicare) funds would not be used in these subsidies and that those hospitals would need to bear the salary and other costs of such personnel some other way. This fact has different implications for different types of hospitals and teaching facilities in this country today, matters that were beyond the committee's purview. Replacement Funding for IMG-Dependent Hospitals For purposes of implementing the previous recommendations, the committee believes that the parts of GME payments related to reimbursement for health care services should be separated from those related to education. The committee is very aware, however, that for a small number of hospitals, severe reductions in IMGs in residency slots may constitute a hardship because those hospitals depend on such trainees for provision of significant amounts of care to the poor, particularly in the nation's inner cities. The committee further believes that policymakers and the professions cannot ignore these service responsibilities. Thus, it urges that new or different replacement funding and care delivery mechanisms be found to provide such services to these populations. It is also of the view that the impact of its other suggestions and recommendations on these hospitals should be phased in over time. Therefore, the committee recommends that the federal and state governments take immediate steps to develop a mechanism for replacement funding for IMG-dependent hospitals that provide substantial amounts of care to the poor and disadvantaged. The committee wished to draw attention to the concept "replacement funding." It did not agree that short-term "transition funding," which is the idea usually put forward in proposals to deal with the IMG-dependent hospitals that provide major amounts of care to the poor, was precisely the appropriate one. The reason is that, in the near future, those hospitals would not likely be able to

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements implement successfully a transition to a more secure financial base while continuing to deliver such high levels of uncompensated care to the uninsured and to disadvantaged, inner-city populations. Therefore, committee members preferred a concept of replacement funds for those parts of GME funding that now go to underwrite service delivery, understanding that such subsidies might be needed for a considerable number of years in the present competitive market environment for health care. The committee did not, however, see this as a permanent solution to the problem of serving the needs of poor and disadvantaged populations that may today turn to such institutions for their care. Other options, such as expansion of the National Health Service Corps (see Chapter 3) or other creative solutions, can and should be sought. Among the options for replacement funds that might be considered are those that would permit hospitals to hire nonphysician substitutes for IMG residents, such as physician assistants and advanced practice nurses;9 allow hospitals to hire or reimburse physicians in private practice to render some of the services now provided by IMG residents; facilitate the development of better and more extensive ambulatory care networks as a means of delivering outpatient care at sites other than large, inner-city hospitals; and increase opportunities for using physicians in the National Health Services Corps in this capacity. The committee did not examine these options in depth; neither did it explore alternative sources of such replacement funding, because that would have exceeded both its time and other resources and its basic charge. Rather, the committee wished to go on record as (1) favoring limitations in the use of IMGs in graduate training as a means of solving service-delivery problems; (2) endorsing the separation of education from meeting service needs; and, (3) at the same time, urging that policymakers and health professionals take responsible steps to ensure that the poor and other populations now served chiefly by IMG-dependent hospitals are not harmed. Although the committee did not explicitly endorse proposals about universal access per se, it did acknowledge the broader issues of access to health care for all. Further, consistent with the overall mission of the IOM, it took note of the view of an earlier IOM committee, which identified making basic health care coverage universal as a fundamental goal of health care reform and stated that "all or virtually all persons—whether employed or not, whether ill or well, whether old or young—must participate in a health benefits plan" (IOM, 1993b, p. 7).

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements Data Collection and Information Dissemination The committee has to this point offered three recommendations that it believes will be, collectively, a useful first step toward addressing the nation's physician supply problems. Nonetheless, physician supply is a moving target, and additional steps may be needed. Rather than simply standing aside and assuming that the problems will be solved, the committee believed a less hands-off approach was appropriate—namely, one that would call for the government or the professions, or both, to monitor the situation actively and closely. The committee endorsed the utility of data collection and dissemination efforts and, in the context of other steps outlined later, advocated that they be undertaken. On the whole, however, the committee did not believe that information gathering and reporting, essentially in a vacuum, will accomplish the necessary changes and reforms that would correct, or prevent, problems of an oversupply of physicians in this country. Thus, it offers the two recommendations below only as part and parcel of action on the recommendations already given. For any approach to dealing with a significant mismatch between physician supply and requirements, more, higher quality, and more timely information is critical. The importance of getting accurate market information to prospective and current medical students was heavily underscored in committee deliberations, especially because of the rising numbers of applications to medical school at a time when a surplus of physicians either exists or at least can be expected in the near future. The committee believes firmly that young adults ought to be able to plan careers on the basis of reasonably accurate data about employment prospects. Moreover, an efficient well-functioning market must have good information available to all. The equivocal findings discussed in Chapter 3 (on whether an oversupply of physicians has positive, negative, or neutral effects on costs, quality, access, use of human resources, and academic health centers) are evidence enough of the dearth of reliable and valid information on these matters To address these problems, the committee came to consensus on a pair of recommendations related to data collection and information dissemination. Specifically, the committee recommends that the Department of Health and Human Services, chiefly through the Health Resources and Services Administration, regularly make information on physician supply and requirements and the status of career opportunities in medicine available to policymakers, educators, professional associations, and the public. The committee further recommends that the American Medical Association, the Association of American Medical Colleges, the American Osteopathic Association, the American Association of Colleges of Osteopathic Medicine, and other professional associations cooperate with the federal government in widely disseminating such information to students indicating an interest in careers in medicine.

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements Data are needed on the current size and composition of the physician workforce and future projections of supply and requirements. Other important information involves specialty and practice location choices. Data on other parts of the workforce, particularly on the training and employment of personnel that are likely to be substituted for physicians in managed care organizations or hospitals, should be collected. Finally, substantial information about the complex interactions of physician supply with health care costs, access, and quality is also needed. The committee recognized that the Department of Health and Human Services, chiefly through its Bureau of Health Professions in the Health Resources and Services Administration (BHP/HRSA), already acquires substantial amounts of such information. In addition, COGME provides an important focus for generating topics for data collection, proposing workforce policies, and further publicizing information generated by the data collection and analysis efforts of BHP/HRSA. So, too, do the major physician associations and specialty societies; the committee, in taking specific note of the data collection efforts of the American Medical Association and the American Osteopathic Association, does not mean to imply that federal efforts ought to compete with, supersede, or replace these programs. This committee encourages all these entities to work together in designing or carrying out surveys and other steps in data collection and analysis. Data collection without analysis, publication, and dissemination is not an especially productive enterprise, however. Therefore, the committee calls explicitly for such information to be made widely available in a timely manner—to the professions, to health education institutions, to health care delivery systems and facilities, to university students (particularly to first-year college students) and possibly even high school students, and to the public at large. The committee fully supports the current efforts of the above-mentioned agencies and organizations and wishes to state its sense that such efforts should continue to be pursued and provided with adequate financial backing, recognizing that different audiences will need different types of reports and information. The activities envisioned above lie more in the area of routine, regular data collection, analysis, and reporting. The issues threaded throughout this report, however, make clear that more than that is needed to provide policymakers and the public with an adequate picture of health workforce issues, especially those involving as sensitive and complex a matter as the supply of physicians in the country. Therefore: The committee recommends that the Department of Health and Human Services provide the resources for research on physician supply and requirements; it specifically recommends that relationships between supply and health care expenditures, access to care, quality of care, specialty and geographic maldistribution, inclusion of women and people of color, and other key elements of the health care system be studied in detail.

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements The committee believes that responsibility for these kinds of complex studies would fall within the purview of at least three different federal agencies. The most obvious is BHP/HRSA. For this agency, the committee would advocate continued support of COGME in its monitoring and policy analytic work. In addition, the Agency for Health Care Policy and Research (AHCPR) has long-standing interests in workforce issues. Because it is the main source of funding for health services research on health personnel issues, the committee believes that AHCPR could usefully sponsor significant studies of the multivariate relationships noted above and could serve as the federal government's focal point for research on the impact of physician supply on costs, quality, and access. Finally, the Health Care Financing Administration (HCFA) is responsible for the Medicare program and for federal oversight of the Medicaid program; therefore, HCFA could be called on for analysis of the interrelationships between changes in GME funding and the Medicare program budget. In addition, both AHCPR and HCFA could examine the impact of replacement funding on care for the nation's poor and disadvantaged populations and on the financial stability of those institutions now providing very large portions of health care to these groups. All of these agencies could also give some attention to the questions posed earlier about implementation of a voucher system for GME funding. Apart from government activity, the committee believes that the nation's major health foundations also can support the types of physician workforce research envisioned above. Several foundations have long traditions of interest in issues related to the health professions, including, for example, the Pew Charitable Trusts, the Robert Wood Johnson Foundation, and the Josiah Macy, Jr., Foundation. In recommending federal action in this arena, the committee in no way wishes to detract from the significant contributions that the private sector can make as well. Certainly the provision of such information would strengthen the workings of an otherwise imperfect health care market. Reinhardt (1994), for example, claimed that a health care system restructured along market-driven, managed care lines might best be left to "work," while the government is used "mainly to help transmit to the nation's youngsters the economic signals emitted by the new market" (p. 261). He went on to argue for a "sustained monitoring system (not merely sporadic research) on the emerging markets" and for clear communication of that information to "students at all levels of higher education" (p. 262). CONCLUDING STATEMENT At the very least, the United States has an abundance of physicians, and many observers have concluded that it either now has or soon will have a

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements surplus. The size of that surplus will depend on several factors: the extent to which managed care dominates fee-for-service arrangements as the basic organizing and financing structure for the U.S. health care system; technological breakthroughs and the shifting balance between halfway technologies and the definitive interventions that will prevent or cure disease; the changes that may occur in the production of U.S. medical graduates; changes in the financing for graduate medical education; shifts in the rate of immigration and entry into practice of foreign medical graduates; and developments in the use of nonphysician health personnel. Although these factors cannot be predicted with certainty, the committee concluded that the probability of an appreciable surplus of physicians was high enough that some steps need to be taken now to ensure that the nation produces the best physicians it can in appropriate, but not excessive, numbers. In considering those steps, the committee acknowledged that the nation can never achieve an absolute match of physician supply and requirements, because different levels of supply will have different implications depending on the underlying structure of the U.S. health care system. Nonetheless, it proceeded with three principles—(1) that the nation should not tie national workforce policy or graduate medical education to the service delivery needs of selected parts of the health care system; (2) that long-term physician workforce policy should be driven by aggregate requirements nationally, and meeting those requirements should be cued more to the output of U.S. allopathic and osteopathic schools than it is today; and (3) that opportunities in the United States for careers in the healing arts, such as medicine, should be reserved first for graduates of U.S. medical schools. The committee elected to explore strategies for the production of physicians within the context of a planned or constrained market; it dismissed the absolute extremes of a completely laissez-faire market approach or centralized regulation and administration and opted for a pragmatic approach that involves some laissez-faire elements and some governmental steps. The focus is on five areas: production of U.S. medical graduates; changes in the financing of graduate training to target it to U.S. medical graduates and to break the link between service and education reimbursements; limitations on the training and entry into practice of international medical graduates; replacement funding for IMG-dependent hospitals to permit them to continue to discharge their service responsibilities to poor and disadvantaged populations; and collection and broad dissemination of information related to physician supply and requirements, market forces, and their relationships to cost, quality, access, and similar concerns.

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements The committee is aware that these issues are extremely complex—more so because of the rapid and unpredictable transformation of the health care system that the nation is now experiencing. It also recognizes that the practical steps it has recommended may have some unforeseen consequences, so further elaboration, discussion, and analysis over time is warranted. Nevertheless, the committee believes that its report reflects a prudent examination of strategies for dealing with major elements of physician supply issues and will permit readers to pursue a knowledgeable debate about these serious policy issues. Although not all audiences may find all the committee's conclusions and recommendations compelling, constructive critique of the report might well be healthy if it prompts a deeper examination and fuller understanding of the problems and likely consequences of proposed solutions. In the meantime, the report points the way to decisive actions that all interested parties in both the public and private sectors can usefully take now to forestall even more significant difficulties in the future. NOTES 1.   The committee's view about physician supply overall is not unlike that of the Council on Graduate Medical Education (COGME), which in its fourth report (1994) stated (p. v): "In the long run, COGME believes that market forces created by a changing health care system will change the specialty and geographic distribution of the workforce. However, the Council does not believe that these market forces alone will produce the needed physician workforce in a timely or predictable manner" (emphasis added). 2.   According to Harvey Barkun (Executive Director, Association of Canadian Medical Schools, personal communication, September 1995), the Canadian residency matching program deals nearly exclusively with graduates of LCME-accredited schools (i.e., those accredited by the Liaison Committee on Medical Education) and is run in two iterations, with only the residual second round open to graduates from non-LCME-accredited schools; perhaps no more than 3 percent of all residents in Canada are foreign medical graduates. A small number of physicians come to train on contracts paid by their home countries (e.g., Kuwait, Saudi Arabia), but they return home at the end of that training. 3.   The complexities of antitrust issues should not be underestimated. According to Havighurst and Brody (1994), professionals are free to advocate their views but not to enforce them by collective action. Thus, they may publish standards, practice guidelines, and the like, and they may certify individuals or accredit institutions that comply with such standards or guidelines, but they cannot boycott or otherwise impose coercive sanctions against unaccredited institutions or uncertified individuals. It has recently been suggested, however, that some otherwise permissible credentialing and accrediting joint ventures between independent professional organizations may be challengeable on antitrust grounds for suppressing competition, not in markets for professional services but rather in credentialing or accrediting itself. However, the Medicare Preservation Act of 1995 (Committee on Ways and Means, 1995) proposes some exceptions from antitrust laws for activities of what it terms "medical self-regulatory entities," including activities relating

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements     to standard setting or enforcement activities intended to foster improved quality of care. Furthermore, a different part of the act lays out some limited circumstances in which provider service networks (i.e., joint ventures) are not violations of federal antitrust statutes. Blumstein (1994) reviewed antitrust matters from a broader medical marketplace perspective and argued that preservation of the antitrust laws' support of a procompetitive environment is, all in all, the preferred direction for the nation. His discussion did not focus directly on antitrust as it affects physicians, but the basic legal and philosophical arguments might be generalizable. 4.   Readers will appreciate that permitting large numbers of IMGs to practice in the United States is not precisely equivalent to bringing more minorities into the medical profession, in part because of the countries from which IMGs typically come; it is certainly not a solution to the problem of opening up more professional opportunities for U.S.-born members of minority ethnic groups as called for by another Institute of Medicine committee (IOM, 1994). 5.   The Prospective Payment Assessment Commission (ProPAC, 1995) has advanced some proposals for reducing Medicare's GME adjustments in the next few years, particularly the IME portion. The commissioners also called for further evaluation of DME payments and of the service–training payment relationships. These changes are directed more at Medicare policy issues, however, than at physician supply or IMG matters, but their fiscal effect would likely be in the directions contemplated by this committee. 6.   With few exceptions, potential candidates for training grant awards must be citizens or noncitizen nationals of the United States or must have been lawfully admitted for permanent residence at the time they actually apply for the grant. Applicants cannot be a citizen of another country and living outside the United States at the time they apply and then come here specifically to be supported by a training grant award. 7.   Proponents have argued that vouchers might (a) make clearer exactly what costs need to be underwritten, through public or private means, for adequate patient care; (b) enable USMGs to get residency training more suited to their likely practice locales in the future—for instance, in areas that are presently medically underserved, in ambulatory settings, or in managed care systems; (c) go a long way toward addressing the nation's IMG question, particularly if such vouchers were restricted entirely or mainly to USMGs; and (d) help address the looming problems of the Medicare program budgets by eliminating the significant fiscal incentives that teaching institutions now have to increase their use of residents. Several questions would have to be addressed should the nation (or the Medicare program) elect to pursue a voucher system for residency training. Chief among them is the ceiling on the total number of vouchers that might be made available (e.g., above and beyond the expected number of graduates of U.S. allopathic and osteopathic schools). Another issue is the timing of the introduction and full implementation of such a program. A third is the value of such vouchers and whether, or by how much, that figure might differ depending on whether the resident was a graduate of a U.S. or a foreign school. A fourth question is how the limited number of vouchers for IMGs might be awarded. Apart from having these design features clearly spelled out, any voucher approach ought to include a rigorous evaluation that would track the effects on USMGs, on IMGs, and on the health care system generally.

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The Nation's Physician Workforce: Options for Balancing Supply and Requirements 8.   Early in this project, a congressional commission chaired by Barbara Jordan (Commission on Immigration Reform, or CIR) issued a report on broad immigration policies (CIR, 1995; Jordan, 1995). Briefly, it called for reducing the overall numbers of immigrants to this country (from 830,000 to 550,000 per year, and an additional 150,000 for certain children) and for changing the priorities given to various categories of immigrants (chiefly relating to immediate versus distant family relationships). It also appeared to give preference to ''skilled" as contrasted with "nonskilled" immigrants, based on a labor market test concerning no displacement of similarly qualified U.S. workers; preference tests would almost certainly be applied to physicians. It also called for some financial disincentives for employing foreign workers. Thus, the proposals considered by this committee are not without recent precedent, but the impact of the CIR recommendations with respect to the inflow of physicians might be mixed. 9.   The IOM is presently conducting two major studies of the health care workforce. In the project on the future of primary care, analyses show that the issue of substitution of physician assistants (PAs) and nurse practitioners (NPs) for physicians in health maintenance organizations and other delivery systems and settings is extremely complex and can be influenced by local circumstances. Among the relevant factors are the relative productivity and costs of these different types of personnel and the availability of PAs and NPs in a given market. These considerations would certainly affect, in complex and highly localized ways, whether and how PAs or NPs might be used to substitute for hospital house staff. The primary care committee report is due out in early 1996. In the study of nurse staffing in hospitals and nursing homes, the IOM committee (IOM, 1996, forthcoming) has looked into hospitals' use of different types of nursing staff, including advanced practice nurses, and discussed the types of leadership, management, and other training such personnel should receive to improve patient care and to reduce the incidence of workplace injury and stress. These issues clearly intersect with those of replacing physicians in training (or hospital-based physicians) with advanced nonphysician staff.